Synopsys (SNPS) Q4 Pre-Earnings: This is what you can expect

Synopsys (SNPS), a software company, is expected to report its fourth-quarter 2024 results on December 4. Wall Street analysts expect the company to report third-quarter profit of $3.30 per share, up 4% from a year ago. Revenue is also expected to rise 2.5% year over year, reaching $1.63 billion in the quarter.

Interestingly, the stock is up about 10% this year, driven by strong demand for the company’s products in areas such as artificial intelligence (AI) and the Internet of Things (IoT). The increasing use of cloud computing has also increased demand for Synopsys’ design tools, which are essential for developing advanced chips for cloud systems.

It is worth noting that SNPS has a strong track record of outperforming earnings. The company has beaten estimates over the past nine quarters.

Analysts Take Ahead of Synopsys’ Q4 Earnings

Ahead of Synopsys’ Q4 results, most analysts have given the stock a Buy rating, with the exception of Wells Fargo’s Joseph Quatrochi, who began coverage with a Hold rating and a $570 price target.

Optimistic analysts expect strong sales and bookings for the quarter, indicating continued momentum in the next fiscal year. They also view the Ansys acquisition as a significant opportunity and expect it to expand Synopsys’ Serviceable Addressable Market (SAM) by $10 billion.

However, Quatrochi expressed caution, citing uncertainty surrounding the approval of the Ansys takeover, which he said could limit the stock’s near-term performance. While he acknowledges that the deal has the potential to increase market opportunities, he is concerned about the potential dilution of earnings per share. Additionally, Quatrochi noted that while Synopsys is well-positioned to benefit from AI-powered tools, broader financial gains from AI adoption may take time, leading him to take a cautious stance.

What do options traders expect?

Using TipRanks’ options tool, we can see what options traders expect from the stock immediately after the earnings report. The expected earnings development is determined by calculating the at-the-money straddles of the options that are closest to the expiration date after the earnings announcement. If that sounds complicated, don’t worry, the Options tool will do it for you.

In fact, it is currently said that options traders are expecting a move of 8.29% in either direction.

Is SNPS a good stock to buy?

As for Wall Street, analysts have a “Strong Buy” consensus rating on SNPS stock based on seven “Buys” and one “Hold” rating assigned over the past three months, as seen in the chart shown below. The average SNPS price target of $641.25 per share implies an upside potential of 13.31%.

See more SNPS analyst ratings

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